Market Report: Spring 2011

By: Hagerty

The collector market showed signs of recovery in the second half of 2010 with a record breaking $172 million in sales at Monterey. That trend has continued through 2011, with strong sales in Scottsdale and Amelia Island. The overall numbers — if not the buying patterns — are reminiscent of market peaks in late 2007 and early 2008.

Hagerty would, however, caution anyone looking at these overall dollar figures in a vacuum. To a large extent, the impressive overall sales figures are still being supported by big sales at the top of the market. Million dollar-plus cars are far more prevalent than they have been in recent memory. And questionable cars — clones, tributes and the undocumented — as well as commodity cars — less rare cars in “driver” condition — still have trouble finding buyers at anywhere near 2007 numbers. It remains a very picky market.

IS MUSCLE BOUND TO REBOUND?

The evaporation of wealth in the equities and real estate markets after the sub-prime mortgage meltdown affected most sectors of the collector car market in varying degrees. Blue chip European sports cars that enjoyed an international marketplace and a strong pound and euro were affected the least. The muscle car market suffered the most. It did not have a significant overseas market and so much of the money propelling it had a “six degrees of separation” relationship to real estate — a lot of cars were bought with home-equity credit lines or by individuals whose businesses depended on the housing market.

After doing a Blue Angels-esque vertical climb out from 2006 to early 2008, muscle cars saw a corresponding flat spin as the hemi market adjusted in 2008 followed by nearly everything else with eight cylinders, rally wheels and a loud exhaust. Ever since, the slump in muscle car prices has been an effective counterpoint for those who wanted to debunk claims of healthy collector car prices, though that group may need new evidence given the shift we are currently seeing.

Not unlike the resurgent DJI, the Hagerty Price Guide Muscle Car Index still has a deep hole from which to climb — it’s 32 percent off its January 2008 high — but these cars made their first upward move since September 2008 and their largest four-month gain since January 2007. Most importantly, this increase in value is not all attributed to Russo and Steele’s impressive sale of a 1970 Plymouth Hemi ’Cuda convertible in January 2011 for $1,705,000 (a top of the market price). In fact, 12 of the index’s components increased in value (versus three that slipped), with 4 of those gainers moving at a double-digit rate. (See analysis of muscle car movers below.)

Transaction volumes are typically seasonal, with a lot of activity expected in the next four months. How these cars fare during that timeframe will reveal a lot about the state of the American muscle market and perhaps the state of the collector car market overall. For now, the current trend gives us reason to be cautiously optimistic in the near term. The muscle car market will return to its former glory of late 2007/early 2008. There is a great deal of pent-up demand in the form of baby boomers who love muscle cars. Just don’t look for it to happen until the real estate market fully recovers.

Muscle car movers

1965 Shelby GT 350: The GT 350 marked the first time that Carroll Shelby turned his attention to the Ford Mustang. With its race-inspired chassis improvements and strong small-block V-8, many believe it to be the edgiest of the Shelby Mustangs. These were $300,000 cars at the top of the market and about half that at the bottom. They will be $300,000-plus cars again whether it’s gradual with the passage of time or sudden with the passing of Carroll Shelby.

1964 Chevrolet Impala SS 409/42: Immortalized in the Beach Boys song of the same name, the four-speed, dual-quad, Posi-traction 409 put out well over 100 hp per cubic inch. Interestingly, the ’64 409 convertible market never super-heated and conversely never dropped much. They’ve already exceeded the prices they were trading for at the top of the market in 2007. The SS 409 looks like the poster child for steady appreciation in nearly any market.

1968 Dodge Charger 426/425 Hemi Coupe: Proof that in the hierarchy of icons, “The Dukes of Hazzard” doesn’t equal Carroll Shelby or The Beach Boys, in spite of the big recent $1.7 million sale of a Hemi ‘Cuda convertible, Mopar muscle in general is still not seeing the positive trending of Ford and GM muscle.

PORSCHE, PORSCHE, PORSCHE

Porsche celebrated its 60th anniversary in the U.S. last year, accompanied by considerable interest in Porsches from the 1950s through the 1970s. That interest has continued into 2011, according to Todd Wertman, co-owner of European Collectibles on PCH, the four-cam 365 Carreras remain in demand as well as late 356SCs. Earlier 356s in both open and closed body styles also are doing quite well: 1959 356A Super Coupes have increased more than 26 percent in value and the 1958 A Super Speedster is up more than 14 percent in just the last four months.

This phenomenon isn’t isolated to 356s, as we also note an increase of 15 percent in the 1972-73 911S and a 14 percent surge in 1967-68 911 soft-window Targa in the same time period. Overall, the Hagerty Porsche Index is up 10 percent for both the year and the last quarter. The aforementioned prominent anniversary and the reputation for reliability and usability that vintage Porsches enjoy is at least partially responsible.

Porsches have a strong following on just about every continent. But the best ones are the ones that have spent their lives in dry climates like the U.S. West Coast. As long as the euro remains strong, look for large numbers of these cars to find their way back to Europe via auction and private treaty sale.

Porsche movers

1958-59 Porsche 356 A Super Coupe: 356 coupes are extremely pleasant and reliable tour cars. Most collectors seem to prefer the smoother style of the earlier A coupes to the B and C coupes. You sacrifice a few refinements including disc brakes, but Porsche drums were quite good and up to all but the most demanding use. Factory sunroofs and good color combinations can add immensely to the value of a 356 coupe. Active rust and amateurish rust and crash repairs can detract just as much. As is generally the case with Porsches, original is best, though we have seen some high-dollar “outlaw” 356 sales over the years.

1967-68 Porsche 911S: The early short wheelbase 911S makes for one of the purest and most visceral early Porsche experiences — more so even than the 356 Carrera 2. Full of vintage charm and as easy to spin as a 930 Turbo Carrera, they’re rare and quite beautiful. Again, collectors demand correctness and originality, with early S fans standing out as persnickety even by Porsche standards. Items like the proper narrow 4.5” Fuchs alloy wheels and glass-covered headlights matter. Rare when new, attrition from rust and crashes have made the early S a car that is a must-own for any serious Porsche collector. Sunroof coupes and soft-window targas are the most desirable. Prices in excess of $100K may be on the horizon here.

1972-74 Porsche 914 2.0: Hailed as the “proto-Boxster” by some, Porsche’s first mid-engined street car enjoyed a period of fairly rapid appreciation both in a financial and academic sense. As prices rose, we were the first to point out the obvious glass ceiling here — the fact that 914 prices were beginning to bump up against asking prices for high-mileage 911SCs (which are by no means worn out at 150,000+ miles). This situation quickly put the brakes on further 914 appreciation (at least for now), and because the young hipster market that seems to have the greatest amount of interest in the 914 isn’t presently flush with cash, we look for the 914 market to remain stable for the time being.

1976-79 Porsche 930 Turbo Carrera: If there’s a collectible Porsche right now that seems ripe for investment, it’s the 930. With the 356A and early 911S, you’re chasing a hot-and-rising market. Some have speculated that the 930 market of today resembles the 2.7 Carrera RS market of 10 years ago. While we’re not sure about that, this badass performance car from an era when other so-called performance cars were utterly flaccid seems a sure-fire deal. Flat for many years, the market is showing early signs of waking up. Buy now.

THE FERRARI MARKET

The Ferrari market continued to pick up momentum, following last term’s 6 percent gain with an 8 percent jump in value. All in all, this leaves our Rosso Corsa Index 16 percent ahead of a year ago and 120 percent ahead of September 2006 when we began tracking values.

Top honors went to the 1958 California Spyder, which saw an 18 percent increase, but all of the index’s component vehicles are priced higher today than they were four months ago. This widespread rise isn’t even limited to the vehicles in the index — closer examination shows that virtually all of the Ferraris for which Hagerty Price Guide publishes prices saw an uptick.

With the exception of perennial laggards, like the 400 and 412i, lately the question hasn’t been if your Ferrari has increased in value, but rather by how much.

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Hagerty Price Guide constantly monitors the collector car market, watching how prices are changing and examining the root cause of these changes. During the past 12 months we have observed volatility across several market segments, with strong gains in European cars in particular. More